Major League baseball is big business. The most popular sport in America, it is extremely lucrative, making more than £18billion over the past four years, dwarfing the Premier League, whose revenues were around £8billion over the same period.

Sports agency and baseball specialist TLA Worldwide is ideally placed to benefit from the Major League’s appeal and the shares, at 37p, are worth a closer look.

The company is listed on AIM but its business is almost entirely in America, where it is one of the largest sports agencies. It makes most of its money by negotiating contracts for players and taking a cut.

Smash: On the baseball pitch, TLA represents top players such as Carl Crawford and Jose Reyes (pictured)

Baseball players’ salaries rose 8 to 10 per cent this year to an average of $3.95million (£2.3million), though top players make considerably more.

About 70 per cent of TLA’s revenues come from baseball, but it is involved in other sports too, such as golf, American football and athletics. Clients include champion golfer Jim Furyk, American football star Reggie Bush and even new fitness guru Jen Selter, who signed up with TLA in January.

On the baseball pitch, TLA represents top players such as Carl Crawford and Jose Reyes. The group was formed in 2011 from the combination of two businesses – an on-field division, which looks after athletes’ contracts, and an off-field one, which covers the other ways that sports stars can make money, such as sponsorship and TV commentary.

TLA was founded by New Zealander Bart Campbell and New Yorker Mike Principe. Campbell previously set up AIM-listed sports marketing firm Essentially, which was sold to public relations group Chime Communications in 2009.

Principe ran one of America’s fastest-growing sports companies, Blue Entertainment Sports Television, before it was sold to French media giant Lagardere.
Results on Tuesday should show group sales up 32 per cent to $19.9million, while profits are expected to surge 39 per cent to $7.1million for 2013.

Impressively for a small AIM-listed firm, TLA pays a dividend, set to rise 31 per cent to 0.7p. The company began paying dividends last year, but future payments are likely to be reasonably generous, particularly as TLA should deliver strong growth over the next few years.

There are 30 teams in the Major League, which last year negotiated an eight-year TV contract worth more than $12billion, double the previous agreement. The deal is likely to mean more money for players and hence TLA.

Baseball contracts also tend to last for five to seven years and TLA has some of the highest earners in the sport on long-term deals worth more than $100million. Commissions are about 4 to 5 per cent and last for the duration of a contract, so the business has plenty of recurring revenues.

Fortunately for TLA, the baseball agency business has high barriers to entry. It is tightly controlled, so all agents have to be vetted initially and at regular intervals thereafter.
Also the process of becoming a baseball player can take years and athletes earn little in the early days.

The most successful agents are those who find and sign players early, nurturing them until they are able to earn serious money. This takes time and financial clout.

As TLA has serious earners on its books it can afford to scout for talent and has a strong pipeline of junior players who will contribute to growth over the next decade.

The group is expanding its presence in other sports and in marketing, where there is huge potential for growth. Encouragingly for potential investors, serial entrepreneur Nigel Wray is a 10 per cent shareholder.

Midas verdict: TLA is in a fast-growing industry and Campbell and Principe are determined to deliver value for shareholders. Buy.